TRANSCRIPT of Interview
with former US Ambassador Matthew Bryza
By Esra Aygin
Published in Turkish in
Havadis Newspaper on 11-12 March 2014
You are working on a proposal to create a collaboration between
Turkey, Israel and Cyprus regarding the Eastern Mediterranean gas and you
believe that this collaboration will contribute to the solution of the Cyprus
problem. What are the details of this collaboration?
Bryza: The proposal that I’m working on
in my capacity as both as a member of the board of TURCAS Petrol but also now
as an academic and the head of a think tank and also as a member of the
Atlantic Council the goal is to come up with a way in strategic sense to come
up with a way to make sure not only that natural gas is produced and is a good
investment that earns money and it enhances the economic security of Israel and
Cyprus but to make sure that and not only to prevent the gas from aggravating
the tensions between the countries because that’s one of the risks happening if
we cannot agree rights – as we have seen but the real goal is to take advantage
of a great and historic opportunity which is to come up with a collaborative
way to satisfy Israel, Cyprus, Turkey and thereby create a new geopolitics in
the region. That would change the dynamics of Eastern Mediterranean and the
geopolitical map in a very positive ways for these countries, for us for NATO
and the EU.
What are the details of your proposal?
Bryza:If you look at the politics of the
region and relations of Israel with Arab states and look at the economics and
the cost of export what makes sense by far is a pipeline from Israel and really
from Cyprus and Israel to Turkey. An Israel to Turkey pipeline either has to
cross the continental shelf of Lebanon and Syria which is is politically impossible
or Cyprus. And under the law of the sea its not clear whether or not in
strictly legal terms Cyprus could block such a pipeline but in practical terms,
of course it could. Because the law of the sea is ambiguous about whether not a
state could block a pipeline being built across its continental shelf and if
you’re an international banker who’s going to have to provide money in this
project -its too risky because Cyprus is an EU member state if they sue you
take you to court at best your project is going to be delayed.
So the investors will not invest in this project unless the Cyprus
Republic gives its consent for the pipeline to pass through its pipeline and go
to Turkey?
Bryza: The international banks who’d
lend the money definitely have that view definitely.
So back to the project?
Bryza: We’ll build the pipeline first
from Israel to Turkey, Cyprus will give permission to cross its continental
shelf and then a portion of the revenues from the early sales of that natural
gas via the pipeline will be reinvested by Delek and Noble in the Vassilikos
LNG terminal so you reduce the financial risk accelerate the financing… First
the pipeline then the LNG terminal and so that makes commercial sense. and
imagine the geopolitics. Imagine the beautiful breakthrough this creates for
Cyprus… This would create a huge momentum to the solution process in Cyprus. That
is a beautiful outcome. And its something no negotiation on its own can do. The
use of economics to draw a beautiful historic breakthrough. But you cannot do
it unless the Cyprus talks move a bit further down the road and allow steps for
this cooperation.
Does your company talk with Israeli Turkish Cypriot
officials. Can you give me some information?
Bryza: Our team maintains very senior
level contacts – as high as you can go very very top in Turkey and in Israel
with the PMs team and very top of the FM and Energy Ministry and in Cyprus too.
Companies try to remain apolitical and very technical and we say this is the
cheapest most effective way here’s the technical feasibility study we are ready
to do it.
What is the response that you get?
Bryza: Oh yes. Quite positive from
everybody.
Do they see they have an interest in this too?
Bryza: Very much so. I think in the
beginning in the Roc – GCs the view was we are just going to build our own LNG
terminal… The companies that are developing the Aphrodite field Noble and Delek,
they listened to that because they’re guests in the country. They want to make
the government happy if it is commercially viable to do that to build the LNG
terminal. But I think everyone has realised its not commercially viable yet. It
may be later. But not now. Last summer the reserve estimates were revised
downward. There simply is not enough estimated reserves – look, not even proven
- to justify even 1 production line. There’s not even enough to make even 1
production line of natural gas commercially attractive. And for Vassilikos to
make money commercially you need at least 2 production lines. So it’s nowhere
near commercially viable.
How about the idea of bringing Israeli gas to Cyprus to make LGN
rational?
Bryza:… I think there’s no chance for
Israel to say for our first export option of our natural gas the first one were
going to export it from another country whether its Cyprus or any other
country. No country ever in history has decided that its first or only export road
for its natural gas would be an LNG terminal in another country. You want to
control that project. You want as much control as possible as government over this
critical infrastructure asset. And an LNG terminal as a strategic asset could
be vulnerable to all sorts of threats. So I think Israeli officials have made
clear that they are not going to use Vassilikos as their first export option.
But they have said ‘we want 2 options.’ ‘We want an LNG option and we want a
pipeline option.’ And what we are arguing is obviously the most efficient and
politically attainable pipeline option is Israel to Turkey and given that Delek
and Noble are the main companies developing both Levathian in Israel and
Aphrodite in Cyprus, why don’t we do what makes commercial sense and strategic
sense which is reach an agreement.
You have high-level contacts in all countries. What does Cyprus think about such a
cooperation before solution?
Bryza: I think in Cyprus the political
leaders are realising gradually that they put themselves in a corner by making
such grandiose claims about how easy it would be to achieve Vassilikos and what
it would do for the economy. Now they think uh oh this is going to be much
harder than what we thought. Gradually they are recognising that the cheapest
by far the most effective the way to maximise revenue for Cyprus is a pipeline
from Cyprus to Turkey. This politics is still being formed on the island. I
feel the momentum is moving in this direction.
If you are a Greek Cypriot
leader and you are worried about getting out of financial crisis paying your
loans to Troika and have enough revenues to stimulate economic growth you want
to get the most money you can and the most money you can get is out of a
pipeline to Turkey not an LNG without question.
Is Israel telling Cyprus to hurry up?
Bryza: I think so. I am never there in
the negotiations but I know there is an unprecedented level of contact between governments
of Cyprus and Israel.
Do they have contacts with the Turkish Cypriot side?
Bryza: I don’t think so…
What if there is no improvement in negotiations? Your plan
collapses? Is there any other way to realise your plan?
Bryza: There is none. If there’s no
positive momentum its never going to be politically feasible for GC leaders to
say yes I give permission for pipeline to pass through our territory and go to
Turkey. Not possible for Turkish politicians to say that’s great but lets
channel some of the revenue to Cyprus’ Vassilikos terminal. It just won’t be
possible.
What happens to Eastern Mediterranean gas?
Bryza: Israel probably exports some gas
to the Palestinian territories and Jordan and go with Floating LNG. And follow
developments in the region.
Will Cyprus be able to build Vassilikos?
Bryza: It would eventually. But it would
take much longer and be much more expensive.
What kind of a timeframe are we talking about for Cyprus to get gas
revenues in case of your project and in case this fails?
Bryza: As Charles Ellinas put it – head
of the Cyprus natural hydrocarbon company – if everything went perfectly
now - new appraisal wells which are
being drilled now are successful and they allow the gas reserve estimates to
increase and they conduct negotiations with international financiers you could
get a final investment decision in the most optimistic scenario in 2018. After
that you have to finalise the financial package that takes another couple of
years. Then you have to build it and then after that you have got to use
initial revenues to repay investors. From his perspective its 10 years before
Cyprus’ treasury would see any revenue. 10 years in the perfect scenario. And
it never is the perfect scenario. Never.
We plan to have the gas already
flowing by 2018. So you could have revenues flowing into Cyprus so six years
earlier. These revenues would be a big chunk of money but the breakthrough in geopolitics
I am talking about could revolutionise the economy of both communities, economy
of Cyprus.
Do you have any figures?
Bryza: I don’t. But we know for sure the
economy is going to improve dramatically. There’s is always a multiplier effect
once you have the money flowing and if there is a settlement then there will be
a huge inflow of capital. I think we cannot even conceive this.
Turkey says it won’t allow Cyprus Republic to develop
natural gas without comprehensive solution. Do you think Turkey may use
military force?
Bryza: I think Turkey is going to
continue to be careful and prudent in the way it expresses its will militarily.
It’s a huge liability to for Turkey or any country to use force in that
situation. Its not something Turkey would want to do. … But if pushed in a
corner it’s shown its willing to use force. I think the calculation in Ankara
is that if we just suggest we are going to use force it’s like the Sword of Democles
over your head to chop off your head any time.
Did Noble have talks with your company and other Turkish companies?
BOTAS? What is being discussed can you give me some information?
Bryza: Of course yes. Noble and Delek
are conducting negotiations with a couple of groups - at least 2 groups ours
and Zorlu’s about building a pipeline. Botas wont be an investor in the
pipeline but they the negotiations are centering around a pricing formula right
now. We are negotiating the pricing of the gas and BOTAS has to be part of
that. If you’re negotiating a formula of how to price the gas BOTAS has to be
involved because it determines the national price.
What is Zorlu’s proposal? Do they foresee a similar route?
Bryza: I am not familiar in detail with
Zorlu's proposal. I know Zorlu is
talking about a sub-sea pipeline along a similar route, across the continental
shelf of Cyprus from Israel to Turkey.
There’s a new negotiations process in Cyprus with a
huge support from international community. Does natural gas have role?
Bryza: It definitely has a role. I do
believe that energy provides a motivating factor. It has helped to enliven
discussions and give people a bit more excitement. But at the same time energy
is an issue that can divide the parties more deeply when it comes to revenue
sharing. But I am sure the people that actually conduct negotiations also
realize it creates potential difficulties unless everything is managed in a
thoughtful way.
This time sides seem more committed. Why?
Bryza: There are a number of factors.
First and foremost the mood of the island has changed for a number of reasons.
There’s a natural give and take in any country’s politics whereby if you try
something for a while and it fails you change course and the rejectionist
approach totally failed. Look where it Cyprus. It left Cyprus with no prospects
of a solution with nearly I would argue no viable way to export its natural gas
until there’s more investments and more reserves are proven. Yes in the EU but
seen as difficult and spoiler. This approach didn’t achieve what it was
supposed to achieve And we are left with the island frozen and divided. The
arguments of rejectionists on both sides have been exhausted. I really think
the majority of Cypriots on either side want a solution. Of course you could
argue that the economic crisis in Cyprus has had an impact it makes the people
more eager to come up with a solution.
Why would Turkey want a solution?
Bryza: Here the AKP and Foreign Minister
Davutoğlu and Prime Minister Erdoğan have made clear that they want to see a
breakthrough and if possible a settlement. I think I hope Turkey understand
strategically Turkey can play a much more significant role in the Eastern
Mediterranean and broader Middle East if this problem is resolved and if Turkey
plays a role in resolving it. Then the strategic value of Turkey increases.
Second I think Turkey understands on the energy side that the resources
available can help Turkey economically by cheaper supply of gas but also
establish Turkey as a gateway to Europe for diversified supplies of gas. Three,
Turkish professional diplomats have long understood that continuing existence
of Cyprus problem makes it impossible for Turkey to work closer with the EU and
– not necessarily accession – but also this enduring dispute makes it harder
for the EU and NATO to work together militarily so for a small group of real
specialists in positions of power there are all sorts of reasons to solve the
Cyprus issue. Then there are of course the elections coming up here in Turkey.
I think Prime Minister Erdoğan has decided that its good for him and for his
party if he and his team are seen as resolving one of the most serious problems
that has faced Turkey for so many decades.
Would this be an advantage? This is a national issue for most Turks?
Bryza: So far Turkish populists you
mention have not come up with a single alternative view. Probably Prime
Minister Erdoğan’s view is accurate in that if he were the one creating a
settlement that turkey likes then that is a big plus - comprehensive solution
bi-zonal, bi-communal fed in which rights of Turkish Cypriots are not only
respected but guaranteed in a way that allows them to coequally determine the
future of the island economically and politically. That is a huge victory for a
Turkish leader.
The US senior officials also seem very active for solution?
Bryza: US government is very active in
encouraging a Cyprus settlement. It always has been but it has increased its
activity as reflected in the statement by Kerry and activities of the assistant
secretary for European and Eurasian affairs Victoria Nuland.
Yes she came to Cyprus.
Bryza: Yes that’s quite rare.
She had a big role in joint statement?
Bryza: Yes but our Ambassador in Nicosia
John Koenig is extremely talented and capable and has been doing the same. All
of the groundwork had to be prepared and that has taken a couple of years and
ambassador Koenig has done a great job.
So there was a lot of work to get the background prepared?
Bryza: Yes the US Embassy is always
trying to bring the sides together along with the British High commissioner who
is often the most capable person on the island but the US became more active
when it became clear that the both Cypriot side was going to be more active.
Especially after Presıdent Anastasiades was elected, because we all know that
he was the only Cypriot politician really in support of the Annan Plan. He is
very courageous. When I was the mediator I have to say he was by far besides
Glafcos Clerides the most active the most energetic and most positive about
reaching a settlement. So once he was in power, then the US got more energised.
But the Cypriots were the ones to take the lead.
How about Mr. Eroglu? He never really liked the idea of a federation.
How are we going to get him move forward? Is that going to be Turkeys role?
Bryza: I think it is. It is a very
complex issue. He is elected. Yet Turkey is much more than simply a neighbour
in your case. So I hope there is confidence among TCs that Ankara knows what it’s
doing and knows what is in everybody’s best interest. And I hope he will be
supportive of a settlement. And I would hope that Mr. Eroglu would also
understand that his community would also benefit tremendously from what I have
described. There right now is much less economic development happening than
could happen.
What is US’ benefit in this. Why is it working so hard?
Bryza: Well first of all there is a
strong Greek American community that would like to see a comprehensive
settlement. That’s the domestic political side. But what really drives it is
geopolitics and understanding that NATO is not entirely healthy if two of its
members and key to the southern flank Greece and Turkey are not happy with each
other. Cyprus is right in the middle of that unhappiness between Greece and
Turkey. And on top of that the second factor of geopolitical character is that
NATO EU military cooperation is blocked. US would like to see much closer
collaboration operationally and strategically between the NATO and the EU. So
if you solve Cyprus you get that to happen. Another factor is that the US would
very much like turkey move toward the EU and become a member of the EU and as
long as the Cyprus dispute is out there, that is not possible. So there are a
whole many reasons why the US cares. And of course now there is energy is a new
issue and an additional issue.
Are you hopeful of a solution in Cyprus?
Bryza: I am even optimistic. I am not
optimistic that in the short term there is going to be a comprehensive solution
in the Cyprus problem. I think things will have to happen sequentially. You
take a step up one ladder which is the Cyprus settlement issue and then you can
take a couple of steps up the energy ladder and then once you’ve moved up you
can take a couple of more steps on energy ladder that is going to make people
want to take more steps on the Cyprus ladder. Energy and settlement issues will
go together in tandem and motivate each other.
Like what?
Bryza: Like it could be the Ankara
protocol all those issues Turkey implementing Ankara protocol, which means you
get something done in Varosha in Famagusta and you get ports open maybe some
sort of certificates of origin for Turkish Cypriot produced goods that EU will
recognise. So the Ankara protocol becomes more than just opening ports. It
becomes sort of a way to free up Turkish Cypriots economic access to the world.
That is a huge breakthrough. It’s not a comprehensive settlement but it’s a
breakthrough. And then that changes the mood in a very positive way and then
you can conceive of this formula with Cyprus granting permission to cross its
continental shelf. So yes you have to do more in Cyprus for the collaboration
in energy but you don’t have to go to the fullness of a comprehensive
settlement. And I think it’s even dangerous to even think that way. It’s
dangerous to incorporate these energy issues formally into solution process and
the plan on top of all the difficult things that you already have. I think the
issue of potential revenue from energy projects should be kept out of the
comprehensive settlement talks and I think you should allow that issue that big
pot of money as an incentive. You should keep it aside don’t politicise that
issue.
Could an interim agreement that will allow energy collaboration pose
the risk that the Cyprus issue is put on hold again because the big powers
already have what they want?
Bryza: Not at all. The United States
hoped for and supported a comprehensive settlement of the Cyprus question
during the entire 23 years I was a diplomat.
This remains the case today. U.S. Government efforts have increased or
decreased depending on how much progress the Cypriot parties themselves seemed
to be willing to make. If there is an interim Cyprus settlement, let us say,
focused on implementation of the Ankara Protocol, then participation at the
highest level of the U.S. Government in pursuit of a comprehensive Cyprus
settlement will only increase.
There is a very common belief that Cyprus remained divided until now
because US wanted it to remain divided and it will be solved now because the US
wants? Is this true?
Bryza: It’s ridiculous. In my 23-year
diplomatic career I never heard of a single conflict anywhere in the world
where the parties don’t think that. Everyone thinks they are the centre of the
world. Everyone wants to believe were so important that the US president the
most powerful person in the world wakes up every day and thinks about us. And
it’s not true. Cyprus is a hassle for US. There is nothing they gained by the
division. US wants reunification. The division all it created was another
problem for the US.
Do you have a message to Turkish Cypriots?
Bryza: I accepted to join the board of
TURCAS also because of the promise of developing this particular project that
would create I think great momentum for a comprehensive settlement in the
Cyprus problem. that is a huge idea to which I am committed to spend the rest
of my career. I totally believe in the need for a solution, the possibility of
a settlement happening and this project can help bring everybody to the finish
line. So that is what I want to do.
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